SERBIAN MARKET OVERVIEW H2 2017
Economic Overview Continuation of Macroeconomic Stabilization in 2017 GDP Serbia economic activity has marked continual positive trends during 2017, recording modest GDP growth of 1% in line with the projections at the end of 2017 as comparing to the same period in 2016. In the upcoming period GDP growth is expected to gradually step up, reaching 3% to 3.5% in 2018, while retaining favourable growth structure. Source: Ministry of Finance of Republic of Serbia, NBS, Danos research By estimations the total economic activity in 2017, measured by GDP and expressed in constant prices, recorded a real growth of 1.9% compared to the same period in 2016. Inflation and inflation expectations stayed within the NBS target tolerance band throughout 2017 CPI In December y-o-y inflation stood at the target midpoint (3.0%). NBS expacts a drop in y-o-y inflation in the first half of 2018, as last year s one-off price increases drop out of the y-o-y comparison. Source: Ministry of Finance of Republic of Serbia, Danos research Based on the Labour Force Survey in Q2 2017 unemployment rate has recorded level of 12.9% marking decrease of 1.8% compared to the same period in 2016. UNEMPLOYEMENT The average gross wage in december 2017 amounted to EUR 629, while average net wage amounted to EUR 495 in real terms. When compared to the 2016, average gross and net wage are nominally higher by 3.9% and real terms by 0.9%. Source: NBS, Danos research
Economic Overview Ned FDI inflow in the first ten months of 2017 amounted at EUR 1.6 billion (up by 12,6 percent yoy), a projection is again revised upwards and at the end of 2017 reaches amount of 1.994 bilion euros. NET FDI Net FDI prognosis for 2018 is expected to increase for 5%. The last quarter of 2017. registered accelerated growth of domestic demand driven by growth in private consumption and private investment. This is supported by real wage growth and employment in the private sector, the growth of new loans to households (cash and housing), growth in retail sales, as well as growth in the value of completed construction works. Source: Ministry of Finance of Republic of Serbia, Danos research Business environment improvement in Serbia underpinned by macroeconomic stabilization along with the global risk aversion has significantly pushed down country s risk premium (c.150 bp). Serbia's foreign trade continued trend of positive growth in the period January-October 2017, and amounted to 28.5 billion euros, an increase of 13.7 percent compared to the same period last year. Rates of export and import in the first nine months of 13.5 and 13.9 percent, respectively. Trade deficit in the observed period amounted to 3.4 billion, and the import-export was 78.9 percent (0.3 percentage points lower compared to the same period the previous year). Moody s has improved Serbia s rating outlook from B1 to Ba3 with a stable outlook. In December, S&P upgraded Serbia s BB- rating to BB- stable outlook. In the past year, Serbia has improved regulations for operating in an absolute sense, as measured progression by the World Bank's Doing Business in 2018 (Doing Business list). Improving regulation in 2016/17. was significantly facilitated the establishment of business entities by reducing administrative fees for verification of signatures and by increasing the efficiency of the registry, thus reducing the time it takes to register a business. Consequently, the cost of starting a business fell from 6.5 % to 2.3 % of income per capita. Also, Serbia has improved the reliability of the system of cadaster using the geographic information system.
Office Market Supply and Pipeline Office take up in Belgrade increased in 2017 for the third year in row. Belgrade is seeing strong construction activity that will increase supply. Further developments are underway predominanly in New Belgrade. Completition of several office projects in 2017 added nearly 30.000 sq m to the Belgrade office stock leaving total moder office stock of Grade A and B above 700.000 sq m. PIPELINE OFFICE PROJECT Project/Investor Location Area (sq m) Status Deneza New Belgrade 2.650 Underconstruction Business Garden / AFI City Center 16.000 Announced Usce Tower 2 / MPC New Belgrade 22.000 Announced N House Block 21/New Belgrade 10.700 Underconstruction Green Heart / GTC New Belgrade 46000 renovation+new Underconstruction Roaming office building Belgrade 4.500 Underconstruction Airport City 5th phase Block 65/New Belgrade 75.000 Announced Skyline / AFI Belgrade 30.000 Announced Immorent Sirius office (2nd phase) Block 43/New Belgrade 12.500 Announced Zigel House / Trgomen Vracar/Belgrade 5.500 Underconstruction Navigator 2 / MPC New Belgrade 27.000 Announced Sirius 2nd phase New Belgrade 10.000 Announced GTC has acquired office building BBC size 17.900 sq m in New Belgrade Novomatic has acquired office building Atrium 63 size 5.000 sq m Demand New occupation and relocations were recognized as main drivers of market activity during H2 2017. When analyzing business sector, traditionally IT sector remained most active followed by call centers. Rental levels Class A office buildings in CBS 15-17 Class B office building 2017 OFFICE COMPLETITIONS Project/Investor Location Area (sq m) Sirius 1st phase New Belgrade 14.500 N house 1st phase New Belgrade 5.800 Atrijum 63 New Belgrade 5.000 GTC Fortzone 3th phase New Belgrade 10.000 Vacancy rate In 2017, the vacancy rate for office space Grade A and B reach the level of 7% with the possibility of additional reduction due to high demand. 10-12
Retail Market Supply PRIME SHOPPING CENTER STOCK-Belgrade TOTAL SERBIA STOCK 170.000 sq m GLA > 700.000 sq m GLA Demand There was significant interest of the retailers which are still not present at the market. They are in the stage of market research and the increase of new project will create conditions for their entry on the market. Some of international big box retailer continue searching for the suitable spaces. While preparing the first openings in 2018, Lidl is searching for the new locations. Retail sector in Serbia was quite dynamic with the increased interest of both domestic and foreign brands. Several new projects will certainly increase the supply of available space in the next year and for sure it will attract new entries. New openings in secondary cites such as Capitol park in Sombor, Stop Shop in Lazarevac, retail park Nest in Kraljevo and Shoppi in Smederevo enable the expansion of retailers in smaller cities Serbia. The developments of retail parks was the growing trend in 2017. New entries in H2 2017 Raiceva shopping center - Calvin Klein, Armani Exchange, Lego Shop and Miamaya Big Fashion Manila Grace, Tezenis, Funky Budha, Reserved Delta City Mango Man Usce Under Armor and Manila Grace Merkator Shopping Center Meli Melo Rental levels in Belgrade - RAJICEVA SHOPPING CENTER (Belgrade) 15.300 sq.m - CAPITOL PARK RAKOVICA (Belgrade) 21.000 sq m - IKEA (Belgrade) 30.000 sq m Shopping centers 30-50 High streets 30-80 PIPELINE RETAIL PROJECT Project/Investor Location Area (sq m) Delivery Date Status Ada Mall / GTC Belgrade 31.000 H2 2018 Underconstruction BW Gallery / Eagle Hills Belgrade 93.000 2020 Underconstruction Big Fashion Vidikovac / Big Fashion Centers Vidikovac 70.000 2019 Underconstruction Promenada / NEPI Novi Sad 50.000 H2 2018 Underconstruction Stop Shop / Immofinanz Pozarevac 7.000 H1 2018 Underconstruction
Residential Market Supply According to the last available official data, number of issued construction permits for the residential buildings within new developments within Belgrade region has recorded significant increase of 49% in the 11 months of 2017 compared to the same period last year. With new deliveries in second half of 2017 of Energo Group -Sun City and Deka Inzinjering A Block 3th phase New Belgrade keeps the domination in developments of new residential complexes. BKA Development has acquired the land plot 4.136 sq m for commercial and residential use in Kralja Aleksandra Blvd. Energoinvest Group has acquired the land plot 5.913 sq m for building commercial and residential complex in Block 61 in New Belgrade. Demand Source: Danos research Source: Danos research Since the last evaluation of the H1 Residential market 2017 in Belgrade, it is certain that the number of units that was sold is slightly lower (approx.10 000) that the ones from 2016 (12 839). However, New Belgrade still holds the position of a Hot Spot for the place that people want to settle in, because of it s urban and business districts. With the new projects on the way, like: WEST 65, A Block, Belgrade Waterfront, SunCity, Sunnyville...etc. Belgrade shows it s determination to become one of the Modern, Smart and Green cities, which entails an increase of demand for the residential market. PIPELINE PROJECTS Project Location Investor Total size (units)/phase in progress Status Central Garden Belgrade Downtown AFI Europe, Shikun & Binui Group 500 units /4 th phase -67 units Under Construction Vozdove kapije Vozdovac Shikun & Binui Group 700 units / 2 nd phase -129 units Under Construction A Block New Belgrade Deka Inzenjering 900 units / 4 th phase - 108 units Under Construction Savada New Belgrade Neimar V 3 rd phase Announced West 65 New Belgrade PSP Farman 514 units / 3 rd phase - 100 units Under Construction Belgrade Waterfront Downtown - Center Eagle Hills 1 st phase - 296 units; 2 nd phase - 228 units; Under Construction 3 rd phase - 244 units Sunnyville Palilula Energoprojekt 215 units Under Construction Vracar Gates Vracar Aleksandar Group 250 units Under Construction Paunov Breg Voždovac CPI Group 200 units / 2nd phase - 94 units Under Construction New South Juzni Boulevard EX-ING B&P 129 units Under Construction Panorama Vozdovac Vozdovac Alpros Invest 187 units Under Construction Zemunske kapije Zemun The Building Directorate of Serbia 1700 units / 1st phase - 323 units Under Construction Green Avenue Zemun Montex Real Estate 236 units / 2nd phase - 50 units Under Construction Residential complex in Kneza MilosaCenter Almogim Holding&Yosi Avrahami 260 units Announced
Industrial Market Supply In the second half of 2017, development activity within industrial sector was related to expansion of distribution Investor Distribution/production centres schemes majorly within industrial-logistic zones in close proximity to Belgrade where the majority of the logistic stock is situated. Logistic supply within this area will be enlarged with the delivery of Lidl distribution centre and adjoining office building, the expansion of Eyemaxx logistic complex through development of 2nd phase and expansion of Industrial Park Belgrade upcoming phase. Industrial market stock is approx. 300.000 sq m in Belgrad area and 600.000 sq m in rest of Serbia. In course of logistic development in secondary cities, Novi Sad saw delivery of Univerexport distribution centre. Tertiary cities remain considered as favourable locations for the development of production facilities. Demand RECENT NEW SUPPLY Project/Investor Type Location Size (sq m) Eyemaxx 1st phase Distribution/warehouse Stara Pazova 12.000 Yazaki Light industrial Sabac 30.000 M&B Trans 1st phase Light industrial Indjija 10.000 Lidl Distribution/warehouse Nova Pazova n/a IBP 3 Distribution/warehouse Simanovci 7.244 CG Foods Europe Light industrial Ruma n/a Logistic development in the secondary cities with be enlarged with the delivery of pipeline projects, mainly light industrial. During H2 2017 demand for modern industrial / logistic schemes was majorly driven by transportation, manufacturing and distribution companies. The demand is highest for modern warehouses with adjoining office space with surfaces between 3,000 sq m and 8,000 sq m. PIPELINE PROJECTS Project/Investor Type Location Size (sq m) Industrial park Belgrade 4 Distribution/warehouse Simanovci n/a Tetra Pak Distribution/warehouse Gornj Milanovac n/a Quass Light industrial Indjija 5.000 M&B Trans 2nd phase Logistic center Indjija 10.000 Zumtobel Light industrial Nis 40.000 Eyemaxx 2nd phase Distribution/warehouse Stara Pazova 18.000 Healthcare Europe Light industrial Ruma 10.000 Delphi Light industrial Leskovac n/a Lidl Distribution warehouse/administrative bldg Nova Pazova 78.500 4th phases Rental levels Prime headline rents for modern logistic premises in H2 2017 range between EUR 4/sq m/month and EUR 5/sq m/month. While average rental levels for older and refurbished industrial premises is ranging from EUR 3 to EUR 4/sq m/month. Prime headline rents EUR 4 4.5 per sqm monthly
Our Services VALUATION AND ADVISORY SERVICES CAPITAL MARKETS AND INVESTMENT SERVICES HIGH QUALITY TEAM OF REAL ESTATE CONSULTANTS STRONG KNOWLEDGE OF LOCAL AND REGIONAL SYSTEM BROKERAGE SERVICES (TENANT AND LANDLORD REPRESENTATION) DANOS SERVICES PROJECT, PROPERTY AND ASSET MANAGEMENT CLIENT AND PORTFOLIO MANAGEMENT REAL ESTATE MANAGEMENT SERVICES CORPORATE SOLUTIONS FULL DEDICATION TO CLIENT NEEDS AND DEMANDS
9ž, Milutina Milankovića Blvd, 11070 New Belgrade, Serbia Tel: +381 11 2600 603 Fax: +381 11 2601 571 Email: office@danos.rs www.danos.rs Ivan Simić Country Manager ivan.simic@danos.rs Sanja Baštić Real Estate Manager Agency Dept. sanja.bastic@danos.rs Milan Mišković Consultant Agency Dept. milan.miskovic@danos.rs Ivana Milosavljević Assistent Agency Dept Ivana.milosavljevic@danos.rs Miljan Pavlović REV Associate Supervisor- Valuations and Advisory Dept. miljan.pavlovic@danos.rs Milan Krstanović Manager - Valuation services milan.krstanovic@danos.rs Marija Simić Office Manager Administration Dept. office@danos.rs